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1 DEPARTMENT OF REGULATORY AGENCIES Division of Real Estate MORTGAGE LOAN ORIGINATORS 4 CCR [Editor s Notes follow the text of the rules at the end of this CCR Document.] [REPEALED EFF. 02/14/2011] MORTGAGE LOAN ORIGINATOR TEMPORARY LICENSE Pursuant to and in compliance with Title 12, Article 61 and Title 24, Article 4, C.R.S., as amended, notice of proposed rulemaking is hereby given, including notice to the Colorado Attorney General, and to all persons who have requested to be advised of the intention of Board of Mortgage Loan Originators to promulgate rules. Section 3. Applicability Section Mortgage Loan Originator Temporary License The statutory basis for this rule entitled Mortgage Loan Originator Temporary License, is section , C.R.S. This notice proposes to add rule The rule establishes a temporary license for mortgage loan originators. Section (10), C.R.S., requires the Board of Mortgage Loan Originators to promulgate rules that allow licensed mortgage loan originators to hire unlicensed mortgage loan originators under temporary licenses. The purpose of this regulation is to define the parameters under which an individual may receive a temporary license. Section 3. Applicability This rule applies to all individuals required to be licensed pursuant to sections and , C.R.S. Section Mortgage Loan Originator Temporary License 1. Mortgage loan originators who demonstrate to the Board a good-faith effort to comply with the requirements pursuant to Colorado Revised Statutes , et seq., may be issued a temporary license upon completion of the requirements set forth below:

2 a. The individual has completed all requirements required by the Nationwide Mortgage Licensing System and Registry, including payment of requisite fees, and has been approved by the Board of Mortgage Loan Originators on the Nationwide Mortgage Licensing System and Registry; b. Prior to submitting an application, a set of fingerprints for a criminal history record check must be submitted to the Colorado Bureau of Investigation (CBI); c. Acquisition of a surety bond as required by section , C.R.S., and in accordance with any rule of the Board that directly or indirectly addresses surety bond requirements; d. Acquisition of the errors and omissions insurance required by section , C.R.S., and in accordance with any rule of the Board that directly or indirectly addresses errors and omissions insurance requirements; e. Completion of the mortgage loan originator application; and f. Payment of the application fee established by the Board. 2. Only individuals who are licensed as state-licensed loan originators may hire and sponsor unlicensed mortgage loan originators under the temporary license provision. a. Licensed mortgage loan originators who employ and sponsor such a temporarily licensed mortgage loan originator shall be held responsible under all applicable provisions of law, including without limitation the Mortgage Loan Originator Licensing and Mortgage Company Registration Act and section , C.R.S., for the actions of the temporarily licensed mortgage loan originator to whom a temporary license has been assigned, and are personally subject to all applicable penalties under the law. i. Licensed mortgage loan originators shall notify the Division of Real Estate, in a manner acceptable to the Board, of exact dates of hire and termination of employment for temporarily licensed mortgage loan originators. Sponsoring mortgage loan originators shall complete the Mortgage Loan Originator Temporary License Update Form, found on the Division of Real Estate website at and forward to the Division of Real Estate, in a manner acceptable to the Board, all other information required for the possible receipt of a temporary license. ii. Licensed mortgage loan originators shall be held responsible for the activity of temporarily licensed mortgage loan originators through and including the date of termination and required notification of such termination to the Division of Real Estate. 3. Temporary licenses shall expire 120 days after completion of the mortgage loan originator license application or when the temporary license is terminated by a licensed mortgage loan originator with whom the temporary licensee is operating under. 4. Individuals seeking temporary licenses shall be granted one temporary license. Additional or extended temporary licenses are prohibited. 5. Individuals seeking a temporary license shall complete the paper version of the mortgage loan originator license application posted on the Division of Real Estate s website at 6. Temporary licensees shall request on the application that the Board inactivate their temporary license

3 upon determination by the Board that the requirements of the law have not been met. Applicants shall be notified via electronic mail, fax, or U.S. mail at the contact information provided to the Division of Real Estate in the applicant s mortgage loan originator license application. 7. Any temporary license issued by the Board shall have the same force and effect of the license required by the Mortgage Loan Originator Licensing and Mortgage Company Registration Act for the period of time it is in effect. 8. Once the applicant fully complies with the terms of the law as determined by the Board, the Board shall license the applicant in accordance with section , C.R.S. 9. Due to the changes defined in this rule, the names of temporary licensees will be posted to the Division of Real Estate website at This permanent rule shall be effective August 6, MORTGAGE LOAN ORIGINATOR LICENSE RENEWAL, REINSTATEMENT AND RE- APPLICATION Pursuant to and in compliance with Title 12, Article 61 and Title 24, Article 4, C.R.S. as amended, notice of proposed rulemaking is hereby given, including notice to the Attorney General of the State of Colorado, and to all persons who have requested to be advised of the intention of the Director of the Colorado Division of Real Estate to promulgate rules. Section 3. Applicability Section Mortgage Loan Originator License Renewal, Reinstatement and Re-Application The statutory basis for this rule, entitled Mortgage Loan Originator License Renewal, Reinstatement and Re-Application, is , C.R.S. The notice proposes to add rule The rule defines the license renewal process for mortgage loan originators. Due to the three year license cycle that has been in place, there has been no need to date to define the renewal process. As a result of the S.A.F.E. Act and subsequent passage of House Bill , the license cycle has been changed from a three year cycle to an annual cycle. As a result, mortgage loan originators must renew their licenses annually. Additionally, licensees are now required to be registered with the Nationwide Mortgage Licensing System and Registry. The Director of the Division of Real Estate has determined that it is most appropriate to mimic timelines and processes associated with the Nationwide Mortgage Licensing System and Registry. Failing to do so would cause tremendous confusion on the part of the licensee pool. The purpose of this rule is to clearly define the transition from a three year license cycle to an annual license cycle and to define the license renewal process.

4 Section 3. Applicability This rule applies to mortgage loan originators as that term is defined in (6), C.R.S. and includes those persons who originate a mortgage, offer to originate a mortgage, act as a mortgage loan originator, or offer to act as a mortgage loan originator. This rule applies to all individuals required to be licensed pursuant to and , C.R.S. Section Mortgage Loan Originator License Renewal, Reinstatement and Re-Application. 1. Transitioning from a three year license cycle to an annual license cycle. a. For licensees whose licenses are set to expire at any point in 2009, the Director will administratively change the expiration date to December 31, b. For licensees whose licenses are set to expire on or after January 1, 2010, the Director will administratively change the expiration date to December 31, Renewal Process for active licensees. a. Currently, there are two existing databases that licensees shall independently renew their license through annually. The two independent databases include: i. The license database managed by the Division of Real Estate. This database may be located by visiting the Division of Real Estate website at ii. The registration database managed by the Nationwide Mortgage Licensing System and Registry. This database is located at b. Mortgage loan originators renewing, reinstating or re-applying for registration through the Nationwide Mortgage Licensing System and Registry shall do so in accordance with established timelines, policies and procedures set forth by the Nationwide Mortgage Licensing System and Registry. The Nationwide Mortgage Licensing System and Registry may collect fees for the purpose of registration applications, renewal applications, reinstatement applications, credit reports, criminal background checks and for other processes associated with registration through the nationwide database. c. The Director shall issue or deny a license renewal or reinstatement application within thirty days after the applicant has submitted all of the information necessary for license renewal or reinstatement and after the Director has received all information necessary to make a determination regarding the applicants compliance. d. Regarding the license database managed by the Division of Real Estate, mortgage loan originators may renew or reinstate their license online or may do so by submitting a paper renewal or reinstatement application. Individuals who choose to submit a paper renewal or reinstatement application shall pay an administrative fee prescribed by the Director in addition to the renewal or reinstatement fee due to the administrative burden placed on the Division of Real Estate. The fee for reinstatement is one and one half times the amount of the current renewal fee. e. For both databases, the license renewal period begins November 1st of each calendar year and ends December 31st of each calendar year. Individuals who renew their license shall only do so if they are compliant with all provisions of the Mortgage Loan Originator Licensing Act and all Director rules.

5 f. All licenses expire at 12 midnight on December 31st of each calendar year if the licensee has not properly renewed their license. g. If a license has expired, individuals may choose to reinstate their mortgage loan originator license. The reinstatement period for both databases begins January 1st of each calendar year and ends on the last day of February of each calendar year. Individuals who reinstate their license shall only do so if they are compliant with all provisions of the Mortgage Loan Originator Licensing Act and all Director rules. h. Individuals who fail to renew or reinstate their license shall re-apply with both in order for the Division of Real Estate to review their applications and determine whether the individual is compliant with the licensing requirements. i. All renewal, reinstatement or application fees shall be prescribed by the Director. 3. Renewal Process for inactive licensees. a. Individuals with inactive licenses shall renew their license annually. Individuals with inactive licensees are not required to maintain compliant errors and omissions insurance or a compliant surety bond, but they are required to stay current on all continuing education requirements in order to renew their license. b. Mortgage loan originators may renew or reinstate their inactive license online or may do so by submitting a paper renewal or reinstatement application. Individuals who choose to submit a paper renewal or reinstatement application shall pay an administrative fee prescribed by the Director in addition to the renewal or reinstatement fee due to the administrative burden placed on the Division of Real Estate. The fee for reinstatement is one and one half times the amount of the current renewal fee. c. Currently, there are two existing databases that inactive licensees shall independently renew their license through annually. The two independent databases include: i. The license database managed by the Division of Real Estate. This database may be located by visiting the Division of Real Estate website at ii. The registration database managed by the Nationwide Mortgage Licensing System and Registry. This database is located at d. For both databases, the renewal period begins November 1 of each calendar year and ends December 31st of each calendar year. Individuals who renew their license shall only do so if they are compliant with all provisions of the Mortgage Loan Originator Licensing Act and all Director rules. e. All inactive licenses expire at 12 midnight on December 31st of each calendar year if the license has not been properly renewed. f. If a license has expired, individuals may choose to reinstate their inactive mortgage loan originator license. The reinstatement period for both databases begins January 1 of each calendar year and ends on the last day of February of each calendar year. Individuals who reinstate their license shall only do so if they are compliant with all provisions of the Mortgage Loan Originator Licensing Act and all Director rules. g. Individuals who fail to renew or reinstate their inactive license shall re-apply in order for the

6 Division of Real Estate to review their applications and determine whether the individual is compliant with the licensing requirements. h. All renewal, reinstatement or application fees shall be prescribed by the Director. i. The Director shall issue or deny a license renewal or reinstatement application within thirty days after the applicant has submitted all of the information necessary for license renewal or reinstatement and after the Director has received all information necessary to make a determination regarding the applicants compliance. 4. Renewal, reinstatement or re-application fees. a. All fees collected for the purpose of applying for license renewal, reinstatement or reapplication are non-refundable. 5. Re-application. a. Individuals who have taken the requisite courses and who have passed the test in accordance with Director rules within the immediately preceding three years of an application and who are compliant with the annual continuing education requirements will not need to duplicate the educational requirements upon re-application. 6. Individuals who do not have an active license are prohibited from practicing as a mortgage loan originator. Additionally, individuals who do not have an active license are prohibited from engaging in any mortgage related activities which require licensure pursuant to the Colorado Mortgage Loan Originator Licensing Act, Director rule or as prescribed by Director position statement PRELIMINARY ADVISORY OPINIONS Pursuant to and in compliance with Title 12, Article 61 and Title 24, Article 4, C.R.S. as amended, notice of proposed rulemaking is hereby given, including notice to the Attorney General of the State of Colorado, and to all persons who have requested to be advised of the intention of the Board of Mortgage Loan Originators to promulgate rules. Section 3. Applicability Section Preliminary Advisory Opinions The statutory basis for this rule, entitled Preliminary Advisory Opinions, is , C.R.S. The notice proposes to add rule The rule establishes a preliminary advisory opinion process for individuals concerned about how existing license laws may apply to their circumstances. In 2006, Colorado was one of two states, the other being Alaska, that had no regulatory oversight regarding mortgage brokers. In 2006, the Colorado General Assembly acted and passed House Bill In 2007, due to the state of the real estate market and the foreclosure crisis, the Colorado General

7 Assembly enacted and passed House Bill , Senate Bill , Senate Bill , and Senate Bill In 2008, Congress passed the Housing and Economic Recovery Act of The Housing and Economic Recovery Act of 2008 contained the S.A.F.E. Act, which established minimum national licensing standards for mortgage loan originators and mandated states to adopt such provisions. As a result, in 2009 the Colorado General Assembly acted and passed House Bill to ensure compliance with the S.A.F.E. Act. While Colorado was one of the last states to establish regulatory oversight of mortgage brokers, the registration and licensing laws have seen significant changes. The investment of time, energy and resources have increased with each passing bill. As a result, the purpose of this rule is to define a preliminary advisory process where potential applicants may have their specific circumstances reviewed by the Board or an authorized representative of the Board and be provided an opinion regarding whether or not they are likely to receive a license approval or a license denial. In doing so, potential applicants will be able to receive guidance prior to acquiring and paying for the requisite errors and omissions insurance, surety bond, finger prints for submission, completion of required educational courses and passage of the appropriate test. The purpose of this preliminary advisory rule is to define a preliminary advisory opinion process for prospective licensees. Section 3. Applicability This rule applies to mortgage loan originators as that term is defined in (6), C.R.S. This rule applies to all individuals required to be licensed pursuant to and , C.R.S. Section Preliminary Advisory Opinions 1. Potential applicants for a state license or a registration through the Nationwide Mortgage Licensing System and Registry (the NMLS&R ) may submit information in order for the Board or an authorized representative of the Board to reasonably ascertain the likelihood of license or registration approval through a defined preliminary advisory opinion process. 2. Potential applicants may request a preliminary advisory opinion for any of the following reasons: a. If the individual has been convicted, plead guilty or nolo contendere to any crime under Colorado law, federal law, District of Columbia law, or under the laws of any other states or territories, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, Virgin Islands and the Northern Mariana Islands; b. If the individual has been enjoined in the immediately preceding five (5) years under the laws of this or any other state, District of Columbia or any other territories, Puerto Rico, Guam, American Samoa, the Trust of the Pacific Islands, Virgin Islands and the Northern Mariana Islands from in engaging in deceptive conduct relating to the origination of a mortgage loan; c. If the individual has had other professional licenses, certifications or registrations issued by Colorado, the District of Columbia, any other states or territories, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, Virgin Islands and the Northern Mariana Islands revoked or suspended for fraud, theft, deceit, material misrepresentations or the breach of a fiduciary duty and such suspension or revocation denied authorization to practices as: a mortgage loan originator or similar license; real estate broker; real estate appraiser; an insurance producer; an attorney; a securities broker-dealer; a securities sales representative; an investment advisor; or an investment advisor representative; or d. If the individual has been assessed a civil or criminal penalty for violating any provision of the Colorado Consumer Protection Act.

8 3. Individuals requesting a preliminary advisory opinion shall complete the Preliminary Advisory Worksheet posted on the Division of Real Estate website found at Additionally, individuals requesting a preliminary advisory opinion shall pay a fee identical to the license application fee for applicants as prescribed by the Director. Such fee will be applied as the license application fee if the individual chooses to apply. 4. Individuals requesting a preliminary advisory opinion shall submit all corresponding, or relevant documents related to any conduct or actions described in Section 4, subsection 2 of this rule. Incomplete requests will not be processed. The Board or an authorized representative of the Board may, at any time, request additional information regarding the preliminary advisory opinion request. Such corresponding, relevant or related documents may include, but are not limited to: a. Police officer reports; b. Dispositions documents; c. Court documents; d. Original charges documents; e. Stipulated agreements; or f. Final Agency Orders. 5. Additionally, individuals requesting a preliminary advisory opinion shall submit a written and signed personal explanation and detailed account of the facts and circumstances. 6. Any preliminary advisory opinion shall not be binding on the Board or limit the Board s authority to investigate a future formal application for licensure. 7. An individual seeking a preliminary advisory opinion under this rule is not an applicant for licensure and the issuance of an unfavorable opinion shall not prevent such individual from making application for licensure pursuant to the Mortgage Loan Originator Licensing Act. 8. The Board or an authorized representative of the Board will provide a favorable or an unfavorable opinion RESIDENTIAL MORTGAGE LOANS - [REPEALED EFFECTIVE 03/30/2012] LOAN MODIFIER LICENSURE AND THE REQUIRED USE OF A LOAN MODIFICATION CONTRACT Pursuant to and in compliance with Title 12, Article 61 and Title 24, Article 4, C.R.S. as amended, notice of proposed rulemaking is hereby given, including notice to the Attorney General of the State of Colorado, and to all persons who have requested to be advised of the intention of the Board of Mortgage Loan Originators to promulgate rules. Section 3. Applicability Section 4. Definitions

9 Section Loan Modifier Licensure and the Required Use of a Loan Modification Contract Section 6. Enforcement The statutory basis for this rule, entitled Loan Modifier Licensure and the Required Use of a Loan Modification Contract, is , C.R.S. This notice proposes to add rule The rule requires licensure for individuals who directly or indirectly take residential loan modification applications or who negotiate, offer, or attempt to negotiate or offer loan modifications. Direct managers of such individuals also must be licensed. Finally, this rule requires that individuals who offer or negotiate loan modifications use the Colorado Loan Modification Services Contract prescribed by this rule. The Board of Mortgage Loan Originators finds that a rule regarding loan modifications is necessary in order to provide clarity to the industry. The Board has learned of individuals negotiating loan modification terms for borrowers and has received many inquiries regarding the applicability of current mortgage loan originator licensing law. Specifically, individuals are communicating directly with borrowers and borrowers lenders in order to negotiate terms of a loan modification. In many instances, Colorado consumers are being charged high up front fees regardless of services rendered. The Board has also learned that consumers are being advised to cease making mortgage payments, even when they are already delinquent on payments. Additionally, there are existing loan modification services that are offered by U.S. Department of Housing and Urban Development (HUD) approved non-profit 501(c)(3) agencies which employ housing counselors around the State of Colorado. Such HUD-approved services are offered by housing counselors for free and are not associated with any compensation or other benefit from the borrower to the housing counselor. The purpose of this rule is to clearly notify loan modifiers (those who engage in the act of directly or indirectly negotiating a loan modification) of the applicability of Colorado mortgage loan originator laws and to require the use of a loan modification contract. Section 3. Applicability This rule applies to all individuals required to be licensed pursuant to and , C.R.S. Section 4. Definitions A. "HUD approved housing counseling agency" means an agency which is either a private or public nonprofit organization that is exempt from taxation under section 501(A) pursuant to section 501(C), of the internal revenue code of 1996, 26, U.S.C. 501(A) and 501(C), and approved by the U.S. Department of Housing and Urban Development, in accordance with Housing Counseling Program Handbook and Code of Federal Regulations Title 24, Part 214. B. "Short sale" means the sale of a real property for less than the mortgage loan balance. In the settlement of the short sale transaction the existing mortgage is extinguished. Any deficiency created from the settlement of the transaction may be transformed into a promissory note, charged off, forgiven, or pursued as a judgment against the previous owner. C. "Loan modification" means a temporary or permanent change in one or more of the terms of a mortgagor's existing loan, allows the loan to be reinstated, and often results in a more affordable mortgage payment. The borrower retains ownership of the real property and the mortgage note and the deed of trust remains intact.

10 D. "Loan modifier" means an individual who in the course of the person's business, vocation, or occupation offers to assist, provide, or negotiate on behalf of a borrower to facilitate the receipt of a loan modification from the borrower s current mortgage lender, generally for a fee or other thing of value. Section Loan Modifier Licensure and the Required Use of a Loan Modification Contract 1. Section (6)(a), C.R.S. defines a mortgage loan originator as an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan. It is the Board s position that individuals offering or negotiating loan modifications meet the definition of a mortgage loan originator. Pursuant to section (1)(a), C.R.S, all persons who meet the definition of a mortgage loan originator are required to be licensed. As a result, individuals who directly or indirectly take residential loan modification applications or who negotiate, offer, or attempt to negotiate or offer loan modifications are required to be licensed as Colorado mortgage loan originators. 2. Pursuant to section (7), C.R.S., individuals who directly supervise individuals who take residential loan modification applications or individuals who negotiate, offer, or attempt to negotiate or offer loan modifications are required to be licensed as mortgage loan originators and as state-licensed loan originators by July 31, All individuals required to be licensed shall comply with all other provisions of the Colorado Mortgage Loan Originator Licensing Act and all Board rules. 4. Individuals taking loan modification applications or offering or negotiating loan modifications are required to use a loan modification contract which complies with the Mortgage Loan Originator Licensing Act and the Foreclosure Protection Act. 5. The Board has created the Colorado Loan Modification Services Contract to ensure compliance with the aforementioned laws. This contract may be found on the Division of Real Estate s website at Loan modifiers shall use this form or an alternate form, if such alternate form clearly includes all information required on the suggested form, as determined by the Board. 6. The Colorado Loan Modification Services Contract prescribed by this regulation shall be completed when an application is taken. 7. This rule shall not be construed to include employees of HUD approved housing counseling agencies who are providing advice or general information on loan modifications in an ancillary manner relating to their general housing counseling services or duties. 8. The Board s position on this matter shall not be construed to include employees of mortgage loan servicing companies operating on behalf of the borrowers mortgage lenders. 9. Licensed Real Estate Brokers engaged in licensed activities when performing services within the above defined short sale transactions do not need to maintain a license as a mortgage loan originator. If a real estate broker engages in the activities of providing loan modification services (those not included in the activities of short sales) as defined above, loan modification services are defined as outside the scope of licensed real estate broker activities and therefore, separate licensure as a mortgage loan originator is required. See MLO 1.5 Position Statement. 10. As set forth in section (1)(d), C.R.S., an attorney who renders services in the course of practice, who is licensed in Colorado, and who is not primarily engaged in the business of negotiating residential mortgage loans or loan modifications is not required to be licensed as a mortgage loan originator, but is required to comply with all non-licensing provisions of current

11 mortgage loan originator law set forth in sections through , C.R.S. Section 6. Enforcement 1. Noncompliance with this rule, whether defined or reasonably implied in the rule, may result in the imposition of any of the following sanctions allowable under Colorado law, including, but not limited to: a. Cease and desist orders; b. Permanent injunctions; c. Revocation; d. Refusal to renew a license; e. Refusal to issue a license; f. Imposition of fines; and g. Restitution for any financial loss MORTGAGE BROKERS BOND REQUIREMENT [REPEALED] [Repealed 08/30/2009] SURETY BOND REQUIREMENTS FOR MORTGAGE LOAN ORIGINATORS Section 3. Applicability Section Surety Bond Requirements for Mortgage Loan Originators Section 5. Enforcement The Board of Mortgage Loan Originators updates the following permanent rule entitled, Surety Bond Requirements for Mortgage Loan Originators, according to the authority prescribed in and 910.3, C.R.S. The notice proposes to update rule The rule establishes surety bond requirements for mortgage loan originators. The purpose of this rule is to define the surety bond requirements for mortgage loan originators or any other individual required to be licensed pursuant to and , C.R.S. Section 3. Applicability This rule applies to all individuals required to be licensed pursuant to and ,

12 C.R.S. Section Surety Bond Requirements for Mortgage Loan Originators 1. Mortgage loan originators are deemed compliant with the surety bond requirement if their surety bond meets the requirements defined in one of the following three options: a. Option 1 - Mortgage loan originators, at a minimum, may acquire and maintain an individual surety bond if: i. The surety bond is in the amount of $25,000.00; ii. The surety bond is in conformance with all relevant Colorado statutory requirements; iii. The surety bond is exclusive to covering acts contemplated under current Colorado mortgage loan originator licensing laws; iv. The surety bond is not applicable to any conduct or transactions outside the jurisdiction of the Board of Mortgage Loan Originators (the "Board"); and v. The surety bond is identical to the individual surety bond form developed and approved by the Board. Acceptable surety bond forms may be found on the Division of Real Estate website at b. Option 2 Mortgage loan originators who are employees or exclusive agents for companies with less than 20 individuals who are required to be licensed pursuant to current Colorado mortgage loan originator licensing laws and who do not work for more than one company, may, at a minimum, operate under their company s surety bond if the surety bond meets the following criteria: i. The surety bond is in the amount of $100,000.00; ii. The surety bond is in conformance with all relevant Colorado statutory requirements; iii. The surety bond is exclusive to covering acts of all of the company s W-2 employees or exclusive agents contemplated under current Colorado mortgage loan originator licensing laws; and iv. The surety bond is identical to the company surety bond form developed and approved by the Board. Acceptable surety bond forms may be found on the Division of Real Estate website at c. Option 3 Mortgage loan originators who are W-2 employees or exclusive agents for companies with 20 or more individuals who are required to be licensed pursuant to current Colorado mortgage loan originator licensing laws and who do not work for more than one company, may, at a minimum, operate under a company s surety bond if the surety bond meets the following criteria: i. The surety bond is in the amount of $200,000.00; ii. The surety bond is in conformance with all relevant Colorado statutory requirements; iii. The surety bond is exclusive to covering acts of all of the company s W-2 employees

13 contemplated under current Colorado mortgage loan originator licensing laws; and iv. The surety bond is identical to the company surety bond form developed and approved by the Board. Acceptable surety bond forms may be found on the Division of Real Estate website at 2. Regarding company surety bonds, the company shall provide the Board or an authorized representative of the Board with any and all requested surety bonds relevant to this rule or current mortgage loan originator license laws and shall verify and provide adequate proof regarding the timeline of employment for each individual operating under such company policy. Failure on the part of the company to provide such information shall result in non-compliance regarding the surety bond requirement for individual licensees operating under such company bond. 3. Mortgage loan originators shall use the Mortgage Loan Originator Licensing Update Form to ensure surety bond information is clearly and concisely disclosed and that all information required by this rule is current. This form may be found on the Division of Real Estate s website at a. Mortgage loan originators shall forward this form by mail or personal delivery to the following address: i. Division of Real Estate Attn: Mortgage Loan Originator Licensing Department 1560 Broadway, Suite 925 Denver, CO Additionally, mortgage loan originators may update all of the information required in this rule electronically. They may access their information through the following website: After entering their password and username, mortgage loan originators may update all information without any fees or costs associated with such action. 5. Applicants for licensure, renewal, and reinstatement shall comply with this rule and and 907, C.R.S., in a manner prescribed by the Board. Any licensee who so fails to obtain and maintain a surety bond in accordance with this rule or fails to provide proof of continuous coverage shall be subject to disciplinary action. Section 5. Enforcement 1. Noncompliance with this rule, whether defined or reasonably implied in the rule, may result in the imposition of any of the sanctions allowable under Colorado law, including, but not limited to: a. Revocation; b. Refusal to renew a license; c. Imposition of fines; and d. Restitution for any financial loss ERRORS AND OMISSIONS INSURANCE FOR MORTGAGE LOAN ORIGINATORS

14 Section 3. Applicability Section Errors and Omissions Insurance for Mortgage Loan Originators Section 5. Enforcement The Board of Mortgage Loan Originators (the Board ) updates the following permanent rule entitled, Errors and Omissions Insurance for Mortgage Loan Originators, according to the authority prescribed in and 910.3, C.R.S. The notice proposes to update rule The rule establishes errors and omissions coverage for mortgage loan originators. Section , C.R.S., requires the Board to determine the terms and conditions of coverage required, including the minimum limits of coverage, the permissible deductible, and permissible exemptions. The purpose of this rule is to define the requisite errors and omissions coverage. Section 3. Applicability This rule applies to all individuals required to be licensed pursuant to and , C.R.S. Section Errors and Omissions Insurance for Mortgage Loan Originators 1. Mortgage loan originators are deemed compliant with the errors and omissions insurance requirements if their errors and omissions insurance meets the requirements defined in one of the following three options: a. Option 1 Mortgage loan originators, at a minimum, may acquire and maintain individual errors and omissions insurance in their own name with the following terms of coverage: i. The contract and policy are in conformance with all relevant Colorado statutory requirements; ii. Coverage includes all acts for which a mortgage loan originator license is required, except those illegal, fraudulent, or other acts which are normally excluded from such coverage; iii. Coverage shall encompass all types of transactions conducted by the mortgage loan originator and shall be in the individual mortgage loan originator s name; iv. Coverage is for not less than $100, for each licensed individual per covered claim, with an annual aggregate limit of not less than $300, per licensed individual; and v. Coverage contains a deductible no greater than $1,000.00, or a deductible no greater than $20, for policies that primarily insure reverse mortgage transactions.

15 b. Option 2 Mortgage loan originators who are employees or exclusive agents for companies with less than 20 individuals who are required to be licensed pursuant to the current Colorado mortgage loan originator licensing laws and who do not work for more than one company, may, at a minimum, operate under the company s errors and omissions insurance policy if the policy meets the following terms of coverage: i. The contract and policy are in conformance with all relevant Colorado statutory requirements; ii. Coverage includes all acts for which a mortgage loan originator license is required, except those illegal, fraudulent, or other acts which are normally excluded from such coverage; iii. Coverage shall include all activities contemplated under current Colorado mortgage loan originator licensing laws and states this in the policy; iv. Coverage shall encompass all types of transactions conducted by all of the mortgage loan originators employed at the company or by all mortgage loan originators who are exclusive agents of the company; v. Coverage is for not less than $1,000, per covered claim, with an annual aggregate limit of not less than $2,000, that is exclusive to Colorado consumers; and vi. Coverage contains a deductible no greater than $50, c. Option 3 Mortgage loan originators who are W-2 employees or exclusive agents for companies with 20 or more employees and who do not work for more than one company, may, at a minimum, operate under the company s errors and omissions insurance policy if the policy meets the following terms of coverage: i. The contract and policy are in conformance with all relevant Colorado statutory requirements; ii. Coverage includes all acts for which a mortgage loan originator license is required, except those illegal, fraudulent, or other acts which are normally excluded from such coverage; iii. Coverage shall include all activities contemplated under current Colorado mortgage loan originator licensing laws and states this in the policy; iv. Coverage shall encompass all types of transactions conducted by all of the mortgage loan originators employed at the company or by all mortgage loan originators who are exclusive agents of the company; v. Coverage shall encompass all types of transactions conducted by all of the mortgage loan originators employed at the company; vi. Coverage is for not less than $1,000, per covered claim, with an annual aggregate limit of not less than $4,000, that is exclusive to Colorado consumers; and vii. Coverage contains a deductible no greater than $100, Regarding company errors and omissions insurance policies, the company shall provide the Board, or

16 an authorized representative of the Board, with any and all requested errors and omissions insurance policies relevant to this rule or current Colorado mortgage loan originator licensing laws and shall verify and provide adequate proof regarding the timeline of employment for each individual operating under such company policy. Failure on the part of the company to provide such information shall result in non-compliance regarding the errors and omissions insurance requirement for individual licensees operating under the company s errors and omissions insurance policy. 3. Mortgage Loan originators shall use the Mortgage Loan Originator Licensing Update Form to ensure their errors and omissions insurance information is current and clearly and concisely disclosed. This form may be found on the Division of Real Estate s website at a. Mortgage loan originators may forward this form by mail or personal delivery to the following address: i. Division of Real Estate Attn: Mortgage Loan Originator Licensing Department 1560 Broadway, Suite 925 Denver, CO Additionally, mortgage loan originators may update all of the information required in this rule electronically. They may access their information through the following website: After entering their password and username, mortgage loan originators may update all information without any fees or costs associated with such action. 5. For information regarding errors and omissions insurance providers, visit the Division of Real Estate s website at 6. Applicants for licensure, renewal, and reinstatement shall comply with this rule and , C.R.S., in a manner prescribed by the Board. Any licensee who so fails to obtain and maintain errors and omissions insurance coverage in accordance with this rule or fails to provide proof of continuous coverage shall be subject to disciplinary action. Section 5. Enforcement 1. Noncompliance with this rule, whether defined or reasonably implied in the rule, may result in the imposition of any of the sanctions allowable under Colorado law, including, but not limited to: a. Revocation; b. Refusal to renew a license; c. Imposition of fines; and d. Restitution for any financial loss LICENSING EDUCATION, EXAMINATION AND CONTINUING EDUCATION REQUIREMENTS

17 Section 3. Applicability Section Licensing Education, Examination and Continuing Education Requirements Section 5. Continuing Education The Board of Mortgage Loan Originators updates the following permanent rule entitled, Licensing Education, Examination and Continuing Education Requirements, according to the authority prescribed in (3), (8), , and , C.R.S. The purpose of this rule is to clarify the education requirements for mortgage loan originators to first obtain their state license and then maintain that license by completing continuing education requirements. It is vital to consumer protection and to a competent mortgage loan originator practice that mortgage loan originators understand applicable State and Federal laws. Please contact the Division of Real Estate if you have any questions. Pursuant to (3)(a), C.R.S. mortgage loan originators must complete at least nine (9) hours of fundamental mortgage lending coursework and satisfactorily complete a corresponding written examination. Additionally, in July of 2008, the Housing and Economic Recovery Act of 2008 was signed into law. Title V of the Housing and Economic Recovery Act of 2008 is the S.A.F.E. Mortgage Licensing Act. The S.A.F.E. Mortgage Licensing Act defines minimum national licensing standards for mortgage loan originators and requires states to adopt such provisions. The S.A.F.E. Mortgage Licensing Act requires that pre-licensing education and testing be developed and administered by the Nationwide Mortgage Licensing System and Registry. As a result, Colorado's education and testing requirements were updated in order to conform to provisions defined in the S.A.F.E. Mortgage Licensing Act, House Bill and with standards established by the Nationwide Mortgage Licensing System and Registry. Consequently, this rule outlines how existing licensees may become compliant and how new applicants will be affected. Section 3. Applicability This rule applies to all individuals required to be licensed pursuant to and , C.R.S. Section Licensing Education, Examination and Continuing Education Requirements 1. Applicant and Licensee Education Requirements (a) All mortgage loan originators who obtain a Colorado mortgage loan originator license prior to January 1, 2009 must complete the Director developed and approved forty (40) hours of licensing education and pass a two-part written licensing examination by January 1, Individuals who fail to comply with this requirement may file for an extension. Extensions may be granted through and including March 31, 2009 and shall only be applied for beginning December 1, 2008 and ending January 30, Mortgage loan originators requesting an education extension shall: i. Complete the education extension form. This form may be found on the Division of Real Estate website; ii. Pay a $ extension fee by money order or a cashier check;

18 iii. Request that the Director inactivate their mortgage loan originator license if they fail to pass the written examination in accordance with this rule by March 31, A licensee's inactive status will remain in effect until passage of the mortgage loan originator examination and subsequent request for activation; iv. Provide the Director with an original copy of the requisite surety bond, a power of attorney and proof of errors and omissions insurance. (b) Individuals who fail to pass the requisite written examination by January 1, 2009 and who fail to comply with the extension process defined in this rule are subject to all forms of discipline authorized by the Mortgage Loan Originator Licensing Act. Additionally, the license renewal, reinstatement or reactivation fees for such individuals will automatically be increased by $500.00, due to the related increase in administrative burden. (c) The Director has created the Mortgage Loan Originator Education Extension Form. This form may be found on the Division of Real Estate website. (d) On or after January 1, 2009 and prior to January 1, 2010, each individual applicant for initial licensing as a mortgage loan originator must complete, within the three years immediately preceding the date of the application, forty (40) hours of licensing education and pass a two-part exam approved by the Director of the Division of Real Estate prior to applying for a mortgage loan originator license. (e) For individuals licensed prior to January 1, 2010, in addition to the requirements outlined in section 4(1)(d) of this rule, you must register on the Nationwide Mortgage Licensing System and Registry and as a state-licensed loan originator. In order to do so, you must apply to Colorado through the Nationwide Mortgage Licensing System and Registry by December 17, 2010, pay the certification invoice issued by the Nationwide Mortgage Licensing System and Registry by December 31, 2010, and pass the national portion of the two-part S.A.F.E. Mortgage Loan Originator exam developed and administered by the Nationwide Mortgage Licensing System and Registry or by a company contracted by the Nationwide Mortgage Licensing System and Registry to develop and administer the two part S.A.F.E. Mortgage Loan Originator exam. (f) On or after January 1, 2010, each individual applicant shall complete, within the three years immediately preceding the date of their application, the twenty (20) hours of pre-licensing education requirements developed, administered, and approved by the Nationwide Mortgage Licensing System and Registry, or by a company contracted by the Nationwide Mortgage Licensing System and Registry to develop, administer, and approve the twenty (20) hours of pre-licensing education and pass the two-part S.A.F.E. Mortgage Loan Originator exam, also developed and administered by the Nationwide Mortgage Licensing System and Registry, or by a company contracted by the Nationwide Mortgage Licensing System and Registry to develop and administer the S.A.F.E. Mortgage Loan Originator exam, prior to completing the applications for a state-licensed loan originator license. 2. Certificate of Completion (a) Mortgage loan originator applicants and licensees must receive a certification of completion from their education provider evidencing the successful completion of the respective licensing education coursework before scheduling any of the requisite examinations. (b) Prior to January 1, 2010, mortgage loan originator applicants and licensees must ensure that their education provider files a certificate of completion with the examination provider establishing the successful completion of the respective licensing education coursework before scheduling the exam. The education provider must file the certificate of completion

19 with the approved examination provider electronically or in such manner as prescribed by the Director. 3. Licensing Education Passing Score (a) Prior to January 1, 2010, the mortgage loan originator written licensing examination consisted of two parts. The two parts consisted of the Federal, State and Consumer Protection Laws portion and the Mortgage Lending Basics and Ethics portion. On or after January 1, 2009 and prior to January 1, 2010, an individual shall not be considered to have passed the written test unless the individual achieves a test score of not less than seventy-five (75) percent correct answers on both the Federal and State Law portion of the exam and the Mortgage Lending Basics portion of the exam. If the applicant failed one of the two parts, the applicant could reschedule with the examination provider to retake only the portion of the exam that they failed. In no event is a passing score accepted beyond one year (365 days) from the date of the passing score. (b) On or after January 1, 2010, the S.A.F.E. Mortgage Loan Originator examination, developed and administered by the Nationwide Mortgage Licensing System and Registry or by a company contracted by the Nationwide Mortgage Licensing System and Registry to develop and administer the examination will consist of two parts. These two parts include a national component and a Colorado state specific component. On or after January 1, 2010, an individual shall pass the test in accordance with policies and procedures developed and administered by the Nationwide Mortgage Licensing System and Registry and in compliance with the S.A.F.E. Mortgage Licensing Act. 4. Qualifying Schools (a) Prior to January 1, 2010, applicants and licensees must complete the requisite forty (40) hours of licensing education, approved by the Director, from any accredited degreegranting college or university or any private occupational school that has a certificate of approval from the Division of Private Occupational Schools in accordance with the provisions of article 59 of title 12, Colorado Revised Statutes. (b) On or after January 1, 2010, applicants must complete the requisite 20 hours of licensing education from an educational provider approved by the Nationwide Mortgage Licensing System and Registry or by a company contracted by the Nationwide Mortgage Licensing System and Registry to approve educational providers. 5. Forty Hour Licensing Education Requirement (a) Prior to January 1, 2010, mortgage loan originator applicants and licensees must successfully complete the required forty (40) hours of licensing education through classroom instruction or an equivalent distance learning course offered in a manner as prescribed by the Director. For the purposes of this rule, distance learning shall not be construed to include home or correspondent education. Rather, equivalent distant or distance learning courses shall only include online courses that ensure through security features and functionality that an individual has spent the same amount of time on the online course as they would in a traditional classroom setting. Pursuant to the requirements in Part 1 of this rule, the following licensing education must be successfully completed prior to taking the examination and applying for a license: i. A minimum of 19.5 hours in Federal and State Law; ii. A minimum of 16 hours in Mortgage 101; and

20 6. Exemption Qualifications iii. A minimum of 4.5 hours in Business and Trade Practices (a) Prior to January 1, 2010, as prescribed by the Director or person(s) authorized by the Director, qualifying mortgage loan originator applicants who meet the following criteria are exempt from having to complete the Mortgage Lending Basics and Ethics portions of the education coursework and respective examination. To qualify for the exemption, mortgage loan originators must meet all five requirements. They are as follows: i. Currently maintain a Colorado mortgage loan originator license. ii. Maintain a membership with a mortgage loan originator association approved for exemption by the Division of Real Estate. iii. Maintain a mortgage loan originator association designation that is current and in good standing. iv. Provide the association's letter of certification to the education course provider prior to completing coursework. v. Provide the association's letter of certification to an independent testing service contracted with by the Director, prior to taking the Federal and State Law exam. (b) Prior to January 1, 2010, those who meet the criteria for exemption must complete the Federal and State Law portion of the licensing coursework and pass the Federal and State Law portion of the exam with a score of seventy-five (75) percent or higher. 7. Authority to Audit Education Provider 8. Retesting (a) The Board or the Board's designee may audit any mortgage loan originator courses offered and may request from each education provider or schools offering such courses, all related instructional materials, student attendance records and other information that may be necessary for an audit. The purpose of the audit is to ensure that education providers and schools adhere to the approved course of study, offer course material and instructions consistent with acceptable education standards and instruct in such a manner that the desired learning objectives are met. Failure to comply with this rule may result in the withdrawal of course approval. (a) An individual may retake a test three (3) consecutive times with each consecutive taking occurring at least thirty (30) days after the preceding test. (b) After failing three (3) consecutive tests, an individual shall wait at least six (6) months before taking the test again. (c) Individuals who fail to maintain a valid license for a period of five (5) years or longer shall retake the test prior to re-application, not taking into account any time during which such individual was licensed. Section 5. Continuing Education 1. The continuing education requirements for individuals licensed prior to January 1, 2009, shall begin after their first license renewal. Individuals licensed prior to January 1, 2009, shall complete at

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